La-Z-Boy Reports Fiscal 2020 Second-Quarter Results

Written by Customer Service on . Posted in Public Companies.

MONROE, Mich., Nov. 20, 2019 (GLOBE NEWSWIRE) — La-Z-Boy Incorporated (NYSE: LZB) today reported its operating results for the fiscal 2020 second quarter ended October 26, 2019.
Fiscal 2020 second quarter versus Fiscal 2019 second quarter:Consolidated sales for the second quarter increased 1.8% to $447.2 millionLa-Z-Boy Furniture Galleries® stores:Written same-store sales for the La-Z-Boy Furniture Galleries® network increased 3.5%Delivered same-store sales for the company-owned Retail segment increased 5.0%Consolidated operating margin:GAAP: 6.6% versus 6.5%Non-GAAP*: 7.5% versus 7.3%Net income attributable to La-Z-Boy Incorporated per diluted share (“EPS”):GAAP:  $0.48 versus $0.42Non-GAAP*: $0.52 versus $0.48Fiscal 2020 excludes a $0.03 charge for purchase accounting, a $0.04 charge related to the company’s supply chain optimization initiative, and a $0.03 benefit related to the fiscal 2019 termination of the company’s defined benefit pension planFiscal 2019 excludes a $0.06 charge for purchase accountingCash generated from operating activities was $34.4 million and the company returned $16.9 million to shareholders through share purchases and dividendsKurt L. Darrow, Chairman, President and Chief Executive Officer of La-Z-Boy, said, “As evidenced by solid written same-store sales across the La-Z-Boy Furniture Galleries® network and the sixth consecutive quarter of delivered same-store sales growth for our company-owned Retail segment, the La-Z-Boy brand continues to exhibit strength and relevance in today’s challenging home furnishings environment. For the period, we increased consolidated operating margin led by double-digit profitability in the Upholstery segment, and generated strong cash flow and returns to shareholders. Additionally, our Board of Directors declared a regular quarterly dividend of $0.14 per share, an increase of 8%, demonstrating its confidence in our various growth strategies to further solidify our position in the marketplace and continue to deliver returns to shareholders.”Consolidated sales in the second quarter of fiscal 2020 increased 1.8% to $447.2 million, led by growth in the Retail segment.  Consolidated GAAP operating margin increased to 6.6% versus 6.5% in the prior-year quarter.  Non-GAAP operating margin increased to 7.5% in the current-year quarter versus 7.3% in last year’s second quarter, reflecting improvement in the Upholstery and Retail segments.  Non-GAAP results exclude $1.4 million of purchase accounting charges and $2.8 million of expenses related to the company’s supply chain optimization initiative announced in August.For the quarter, sales in the company’s Upholstery segment increased 1.2% to $320.9 million. GAAP operating margin was 10.0% compared with 10.1% in last year’s second quarter, and non-GAAP operating margin increased to 10.9% versus 10.2%, excluding a $2.8 million charge for costs related to the supply chain optimization initiative. In the Casegoods segment, sales decreased 6.3% to $29.4 million, reflecting industry challenges and the impact of tariffs on the occasional table business, as well as a delay on goods from one supplier.  Operating margin was 7.5% compared with 12.0% in the prior-year period.Sales in the Retail segment increased 6.2% to $148.4 million in the second quarter of fiscal 2020.  GAAP operating margin for the Retail segment improved to 5.7% from 4.7% in last year’s second quarter. Non-GAAP operating margin increased to 5.8% in the current-year quarter from 5.4% in last year’s second quarter, and excluded purchase accounting charges in each period related to store acquisitions. Operating margin improvement was driven primarily by higher volume.  On the core base of 153 company-owned stores in last year’s second quarter, delivered same-store sales increased 5.0%, reflecting improved traffic trends and continued strong execution at the store level.Sales for Joybird (reported in the Corporate & Other segment) increased 11.9% to $20.8 million.  Joybird improved its gross margin but posted a higher operating loss than in the prior-year quarter, reflecting ongoing investments related to customer acquisition, partially offset by supply chain synergies. The company continues to be optimistic about Joybird’s prospects to add long-term value and expects it to be profitable in the fiscal 2020 fourth quarter, excluding purchase accounting adjustments.GAAP EPS was $0.48 for the fiscal 2020 second quarter versus $0.42 in the prior-year quarter. Non-GAAP EPS was $0.52 versus $0.48 in last year’s second quarter, with the fiscal 2020 second quarter excluding a $0.03 per share charge for purchase accounting, a $0.04 per share charge related to the company’s recently announced supply chain optimization initiative, and a $0.03 per share benefit related to the fiscal 2019 termination of the company’s defined benefit pension plan.  Fiscal 2019 non-GAAP results excluded a $0.06 per share charge for purchase accounting.Balance Sheet and Cash FlowFor the second quarter, the company generated $34.4 million in cash from operating activities, and ended the quarter with $119.5 million in cash, cash equivalents, and restricted cash, and $33.2 million in investments to enhance returns on cash. During the period, the company invested $10.7 million in the business through capital expenditures, paid $6.0 million in dividends, and spent $10.9 million purchasing 0.3 million shares of stock in the open market under its existing authorized share purchase program, leaving 5.2 million shares of purchase availability in the program.DividendOn November 20, 2019, the Board of Directors declared a regular quarterly dividend to shareholders of $0.14 per share, an increase of 8% over the prior quarter.  The dividend will be paid on December 13, 2019, to shareholders of record as of December 2, 2019.*Non-GAAP amounts for the second quarter of fiscal 2020 exclude: pre-tax purchase accounting charges related to the acquisitions completed in prior periods totaling $1.6 million, or $0.03 per diluted share, with $1.4 million included in operating income and $0.2 million included in interest expense; a pre-tax charge of $2.8 million, or $0.04 per diluted share, related to the company’s supply chain optimization initiative, including the closure of the company’s Redlands, California upholstery manufacturing facility and relocation of its Newton, Mississippi leather cut-and-sew operations; and $1.9 million in pre-tax income related to the 2019 termination of the company’s defined benefit pension plan. Non-GAAP amounts for the second quarter of fiscal 2019 exclude pre-tax purchase accounting charges of $3.9 million, or $0.06 per diluted share, with $3.7 million included in operating income and $0.2 million included in interest expense.Please refer to the accompanying “Reconciliation of GAAP to Non-GAAP Financial Measures” for detailed information on calculating Non-GAAP measures used in this press release and a reconciliation to the applicable GAAP measure.Conference CallLa-Z-Boy will hold a conference call with the investment community on Thursday, November 21, 2019, at 8:30 a.m. eastern time. The toll-free dial-in number is 844.602.0380; international callers may use 862.298.0970.The call will be webcast live, with corresponding slides, and archived on the Internet.  It will be available at https://lazboy.gcs-web.com/. A telephone replay will be available for a week following the call. This replay will be accessible to callers from the U.S. and Canada at 877.481.4010 and to international callers at 919.882.2331. Enter Replay Passcode: 56776. The webcast replay will be available for one year.Forward-looking InformationThis news release contains, and oral statements made from time to time by representatives of La‑Z‑Boy may contain, “forward-looking statements.” With respect to all forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.Actual results could differ materially from those we anticipate or project due to a number of factors, including: (a) changes in consumer confidence and demographics; (b) the possibility of a recession; (c) changes in the real estate and credit markets and their effects on our customers, consumers and suppliers; (d) international political unrest, terrorism or war; (e) volatility in energy and other commodities prices; (f) the impact of logistics on imports and exports; (g) tax rate, interest rate, and currency exchange rate changes; (h) changes in the stock market impacting our profitability and our effective tax rate; (i) operating factors, such as supply, labor or distribution disruptions (e.g. port strikes); (j) changes in legislation, including the tax code, or changes in the domestic or international regulatory environment or trade policies, including new or increased duties, tariffs, retaliatory tariffs, trade limitations and termination or renegotiation of bilateral and multilateral trade agreements impacting our business; (k) adoption of new accounting principles; (l) fires, severe weather or other natural events such as hurricanes, earthquakes, flooding, tornadoes and tsunamis; (m) our ability to procure, transport or import, or material increases to the cost of transporting or importing, fabric rolls, leather hides or cut-and-sewn fabric and leather sets domestically or abroad; (n) information technology conversions or system failures and our ability to recover from a system failure; (o) effects of our brand awareness and marketing programs; (p) the discovery of defects in our products resulting in delays in manufacturing, recall campaigns, reputational damage, or increased warranty costs; (q) litigation arising out of alleged defects in our products; (r) unusual or significant litigation; (s) our ability to locate new La-Z-Boy Furniture Galleries® stores (or store owners) and negotiate favorable lease terms for new or existing locations; (t) the ability to increase volume through our e-commerce initiatives; (u) the impact of potential goodwill or intangible asset impairments; and (v) those matters discussed in Item 1A of our fiscal 2019 Annual Report on Form 10-K and other factors identified from time to time in our reports filed with the Securities and Exchange Commission  (the “SEC”). We undertake no obligation to update or revise any forward-looking statements, whether to reflect new information or new developments or for any other reason.Additional InformationThis news release is just one part of La-Z-Boy’s financial disclosures and should be read in conjunction with other information filed with the Securities and Exchange Commission, which is available at: https://lazboy.gcs-web.com/financial-information/sec-filings. Investors and others wishing to be notified of future La-Z-Boy news releases, SEC filings and quarterly investor conference calls may sign up at: https://lazboy.gcs-web.com/.Background InformationLa-Z-Boy Incorporated is one of the world’s leading residential furniture producers, marketing furniture for every room of the home. The La-Z-Boy Upholstery segment companies are England and La-Z-Boy. The Casegoods segment consists of three brands: American Drew®, Hammary®, and Kincaid®. The company-owned Retail segment includes 155 of the 353 La-Z-Boy Furniture Galleries® stores.  Joybird is an e-commerce retailer and manufacturer of upholstered furniture.The corporation’s branded distribution network is dedicated to selling La-Z-Boy Incorporated products and brands, and includes 353 stand-alone La-Z-Boy Furniture Galleries® stores and 559 independent Comfort Studio® locations, in addition to in-store gallery programs for the company’s Kincaid and England operating units. Additional information is available at http://www.la-z-boy.com/.Non-GAAP Financial MeasuresIn addition to the financial measures prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), this press release also includes Non-GAAP financial measures. Management uses these Non-GAAP financial measures when assessing our ongoing performance. This press release contains references to Non-GAAP operating income, Non-GAAP operating margin, Non-GAAP income before income taxes, Non-GAAP net income attributable to La-Z-Boy Incorporated and Non-GAAP net income attributable to La-Z-Boy Incorporated per diluted share, each of which exclude purchase accounting charges, charges for our supply chain optimization initiative, and impacts from terminating the company’s defined benefit pension plan. The purchase accounting charges may include the amortization of intangible assets, incremental expense upon the sale of inventory acquired at fair value, amortization of employee retention agreements, fair value adjustments of future cash payments recorded as interest expense, and adjustments to the fair value of contingent consideration. The charges for our supply chain optimization initiative may include severance costs, accelerated depreciation expense, costs to relocate equipment and inventory, as well as other costs related to the closure and relocation of certain manufacturing operations. These Non-GAAP financial measures are not meant to be considered superior to or a substitute for La-Z-Boy Incorporated’s results of operations prepared in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies. Reconciliations of such Non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in the accompanying tables.Management believes that presenting certain Non-GAAP financial measures excluding purchase accounting charges and charges for the company’s supply chain optimization initiative will help investors understand the long-term profitability trends of our business and compare our profitability to prior and future periods and to our peers. Management excludes purchase accounting charges because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions consummated. While the company has a history of acquisition activity, it does not acquire businesses on a predictable cycle, and the impact of purchase accounting charges is unique to each acquisition and can vary significantly from acquisition to acquisition. Similarly, the charges related to the company’s supply chain optimization initiative are dependent on the timing, size, number and nature of the operations being moved or closed, and the charges may not be incurred on a predictable cycle. Management also excludes impacts from the termination of the company’s defined benefit pension plan when assessing the company’s operating and financial performance due to the one-time nature of the transaction. Management believes that exclusion of these items facilitates more consistent comparisons of the company’s operating results over time. Where applicable, the accompanying “Reconciliation of GAAP to Non-GAAP Financial Measures” tables present the excluded items net of tax calculated using the effective tax rate from operations for the period in which the adjustment is presented.





Contact:Kathy Liebmann
(734) 241-2438
kathy.liebmann@la-z-boy.com 

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